Your 401(k) — Maximized Savings
The only thing that is constant is change…
It may not seem like it, but this universal truth directly applies to your retirement savings.
Because as market sentiment changes and money rotates into different asset classes or sectors, the retirement savings in your 401(k) are directly impacted.
That’s why in addition to the tips I shared on Monday, I also want to show you how to rebalance your 401(k) to maximize your retirement savings.
Let’s get started.
Understanding Your 401(k)
401(k) plans invest your contributions into market assets such as mutual funds, stocks, bonds and precious metals.
Not all 401(k) plans are governed the same way. Your employer may or may not match your contributions. Additionally, different 401(k) plans offer different options to invest in.
Whatever the unique stipulations of your 401(k) plan are, you most likely can still make changes to how your money is allocated.
A simple tweak here or there could make a big difference in how much money you retire with.
Let’s get started.
Simple Tips for Rebalancing Your 401(k)
Rebalancing your 401(k) allows you to choose the mix of assets you think will best help you achieve your retirement goals.
The key is knowing your goals and deciding what will work best to achieve them.
Most plans offer tools on their websites to help you determine the best mix. Fidelity, for example, has these tools, among others:
Once you have your goals set, the next step is to determine your preferred asset mix.
Asset mixes can range from stable, slow-growth plans with less risk to aggressive high-growth, high-risk plans. The general rule to follow is this…
Younger professionals with newer 401(k)s are advised to focus on more aggressive asset mixes that may include things like small-cap funds or emerging-market funds.
For those with maturing 401(k)s, it’s advisable to allocate more stable assets like gold funds or Treasuries.
With this in mind, you’re now ready for the final step…. actually rebalancing your 401(k).
Your Final Steps
To do this first go online and open up your 401(k) account dashboard.
Here you can view your current asset mix, gains or losses and other plan info. Each site is different, but all are required to have this info available for you.
From here you should have an option to rebalance your assets, like on Fidelity’s site below:
For each asset option, there should be a prospectus and fund performance info available for review. If the prospectus is not online, call your broker and request it to be mailed to you, at no cost to you.
For example, the Fidelity 500 fund prospectus is below:
You’ll want to review the prospectus for each asset option before you allocate any funds. This way you can ensure that your goals and the fund’s investment strategy are in line.
Once you decide the specific mix of assets that best works for you, you’ll input the amount of your money you want to allocate to each of the new funds.
This could be 3% or 30%, or up to 100%. Guided by the prospectus info, you will be able to determine the right size allocation to meet your retirement goals.
Continue to do this until all your funds are allocated. Click “save” or “submit” and boom, your 401(k) is fully rebalanced.
Now sit back and watch your retirement savings grow.
Until it’s time to rebalance again.
Here’s to growing your wealth,
Chief Income Expert, Mike Burnick’s Wealth Watch
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